E-trading Governance ups the Pace

High-performance algorithmic trading is no longer the privilege of a few high-tech trading firms leveraging cutting-edge, specialised infrastructure. Low-latency trading services are now commoditised, allowing a broader audience of market participants to access this ‘F1 e-trading world.’ However, trading firms also need to invest in more than just straight-line performance; it is now just as important to have the right ‘pit crew’ supporting the business, certifying the controls and governance of the algorithms being used on the trading platform to ensure the safety of the financial stability of the firm and of the firm’s clients.

To that end, the EU’s Markets in Financial Instruments Directive (MiFID II) regulatory technical standard (RTS) 6 states that: “The final draft RTS …under Article 17(7)(a) of MiFID II further specifies the organisational requirements to be met by all investment firms engaging in algorithmic trading, providing direct electronic access (DEA) or acting as general clearing members in a manner appropriate to the nature, scale and complexity of their business model, addressing the potential impact of algorithms on the overall market.”